It sure can be frustrating living with less-than-perfect credit. These bad credit dings, blemishes, and negative marks on our credit reports cause us to have a lower credit score.
We know our credit score, directly determines and influences virtually every aspect of our daily life. From where we live, to the car we drive, even to our discretionary income. Because poor tax is real, and expensive.
We also know our credit reports aren’t accurate. According to a 2012 study by the Federal Trade Commission (FTC) they found roughly one in five American’s have errors on their credit reports. This is millions of people with blatant errors.
The worst part of having less-than-perfect credit is the stigma. Society views us as a second-class citizen. Someone who is unworthy and undeserving of the daily comforts everyone else, takes for granted. It’s like being a felon, just with your credit history.
Look, O.J. didn’t have to serve his maximum prison sentence. And while it may temporarily feel like you’re on the wrong side of the credit laws, there is abundant hope. After all, O.J. got out of real prison early, chances are you too can get out of bad credit prison early.
It’s true, seven years is the maximum amount of time most bad credit items can remain on your credit reports. With rare exception such as a chapter 7 bankruptcy, which can remain on your credit reports for 10 years.
Did you know there is no minimum amount of time bad credit items must remain on your credit reports? This is fact. Moreover, every single year the credit bureaus remove millions of bad credit items from consumer’s credit reports, and long before seven years slowly ticks by.
Listen, your credit score is a lot like your Grade Point Average (GPA) in glory school days past. It doesn’t matter if you’re acing all your courses, if you’re failing The Art of Walking, because this negative mark is going to decimate your overall GPA.
This is also true of your credit score. And this is why it’s of such paramount importance to clear bad credit items, in order to get a better credit score.
The purpose of this article is to share exactly how to clean credit report dings, blemishes, and negative marks and do so legally by exercising your consumer rights. And we’re going to start with the credit report dispute process, and we’ll wrap this article up, by sharing the four steps to dealing with debt collectors.
Credit Report Dispute Process
The Fair Credit Reporting Act (FCRA) is federal legislation that was passed by Congress, way back in 1970. This legislation is what’s supposed to give us a way of notifying the credit bureaus that we have an error on our credit reports, and the bureaus should fix it.
We all know, millions of American’s have errors on their credit reports from the FTC study. And the very first step to remove bad credit is to grab current, updated copies of all three of your credit reports with Experian, Equifax, and TransUnion.
You can do this for free by visiting AnnualCreditReport.com. This is a website created by our government to provide you with your free copies of your credit reports, every 12 months. You won’t be able to request your free credit report directly from each credit bureau.
Once you have your credit reports, we need to review them in detail. Naturally, we’re looking for items or what the industry calls tradelines. In other words, the items we believe are inaccurate, incorrect, or made in error.
Once you’ve identified these items, our next step is to file our credit report dispute. And before we get into detail, we need to share, there have been recent amendments to the FCRA. Today in 2018, you can dispute a data-furnisher (the company that’s reporting the negative account information) directly, thus bypassing the credit bureaus.
Traditionally, and what continues today to be the primary method of fixing credit is by disputing the credit bureaus directly. And that’s our focus in this article.
There’s three ways to file a credit bureau dispute: online, over the phone, and by mail. Once the credit bureaus get our dispute, they first get to deem it valid or frivolous.
We need to use an example, because there’s a lot of confusion about this issue, if you have a charge off item on all three of your credit reports. You’re going to have to file three separate credit bureau disputes.
In other words, you’ll need to file a TransUnion dispute to potentially remove the charge off on your TransUnion credit report. Additionally, you’ll need to file an Experian dispute to potentially remove the charge off on your Experian credit report. And so on and so forth.
The credit bureaus are separate entities. They don’t communicate with one another. What’s more, is it’s very likely you’ll have different information contained on your three credit reports. The takeaway is to view and treat each of your credit reports as a separate, independent case.
Once you’ve filed your credit report dispute, the credit bureaus will reach their decision on if your dispute is valid or frivolous. You’ll be notified of their decision.
If your dispute is deemed frivolous, which is unfortunately a very common result, the credit bureau will request additional information from you. Comply with their request, and with some diligent persistence, they should eventually find your dispute valid, and as a result, conduct an investigation.
Once the credit bureaus deem your dispute valid, they’ll conduct what they call a re-investigation. As if there was an original investigation that occurred before the item was placed on your credit report.
Nevertheless, during their re-investigation, they’ll contact the data-furnisher (creditor, lender, company reporting the information) and they’ll ask them to verify your account. Along, with any relevant information like the dates of account activity, total balance, etc.
If your account is not verified, then in compliance with the FCRA, this means the credit bureau must remove this item from your credit reports. This is how to clear credit history dings, blemishes, and negative items and do so legally, by exercising your consumer rights.
If the account is verified, then it’ll remain on your credit reports. However, this doesn’t mean you’re locked in a bad credit prison for seven long years. But, temporarily the item will remain. Every single one of the marks on your credit reports is supposed to be verifiable.
You’ll be notified of the credit bureau’s re-investigation results typically within 30 to 45 days. Depending upon how you file your credit dispute, will determine your notification method. For instance, if you filed your dispute by mail, you’ll receive your results by mail. Along, with an updated copy of your credit report, if changes were made.
The Unvarnished Truth
We wish it was this easy to remove bad credit marks from your credit reports, because the unvarnished truth is it’s not. Even for the millions of American’s with blatant errors on their credit reports, it’s often not as simple as filling a credit dispute.
All three of the credit bureaus have been fined repeatedly by our government for violating consumer rights under the FCRA. In 2015 all three credit bureaus agreed to pay $6 million to 31 states attorney generals for allegedly violating consumer rights.
In recent years, 60 Minutes aired a story sharing just how darn near impossible it is for the average person to dispute and remove an error from their credit reports. And many people, mistakenly believe the credit bureaus are our government or have some quasi-government standing.
This is in addition to individual lawsuits from consumers. We must share one example in 2013 when a woman by the name of Julie Miller woke up one day to discover 38 bogus collection accounts on her Equifax credit report.
Obviously, this destroyed her credit score. She was in the process of trying to get approval for a new credit line, but was of course denied. Julie did exactly what she was supposed to do under the FCRA.
She filed her Equifax dispute, and over the next two years she kept getting the response that her dispute was frivolous and Equifax needed more information. Julie, complied and sent tax returns, W-2’s, pay-stubs, DNA, her firstborn child and all to no avail.
Yes, that’s a small exaggeration. The point being two years, she invested trying to get Equifax just to deem her dispute valid, so they would re-investigate, the most obvious of errors. And she kept hitting brick walls.
Finally, she got fed up and sued Equifax and won. A federal jury awarded Julie $18.6 million, which was later reduced by a federal judge to $1.8 million. Here’s the kicker, even a federal judge found Equifax’s behavior so reprehensible he awarded Julie nine times as much money for her punitive damages.
Her compensatory damages, the money intended to make your life whole again, was only $180,000 after the federal judge reduction. And her punitive damages, the money for the annoyance, was $1.62 million. Nine times as much.
Hopefully, you’re issues aren’t as dire as Julie’s. And we only share this, so you have a good, comprehensive understanding of who you’re going into battle with when you dispute credit report items with the credit bureaus.
On a sidebar, the credit bureaus are private for-profit businesses in an estimated $4 billion per year industry. This means, the credit bureaus have pumped millions of dollars into Washington lobbyists, to influence our lawmakers.
Moreover, they’ve created sophisticated public relations campaigns with the intention of confusing people. The idea, is to blur the lines and make the credit bureaus seem like some government agency, and with great success.
As we shared, most people believe the credit bureaus are government agencies. They don’t realize the credit bureaus are exactly like Apple, Target, and Starbucks. The credit bureaus are regulated by our government. They have no quasi-governmental official standing.
As one of many examples, the credit bureaus have created watchdog agencies called the Consumer Data Industry Association (CDIA). Along with the wonderful sounding National Consumer Assistance Plan (NCAP).
These groups announced in 2017, they were going to change the data standard requirements for the credit bureaus, concerning public records. According to the press release: “Equifax, Experian and TransUnion continually seek ways to ensure the data they maintain on their consumer credit files is accurate and current, to best serve consumers and the needs of their business and government customers.”
Public records include civil judgements, tax liens, and bankruptcies and they will now require a modicum of information. At a minimum accurate identifying consumer information including: name, address, and Social Security Number and/or date of birth.
Along with a minimum frequency of courthouse visits to obtain newly filed, and updated public records of at least every 90 days. This should have been standard operating procedure for decades!
Public records on credit report files are some of the worst items to have. These marks can cause people’s credit scores to drop hundreds of points. And this press release goes on to say a vast majority of civil judgements don’t meed this standard.
And approximately half of tax liens, don’t meet these requirements. Check out an article, for more details about how to remove tax lien from credit report files. And a YouTube video for more about how to remove a judgement from credit report files.
Yet, the credit bureaus make this announcement like they’re doing us some big favor. Like keeping our personal information safe, in light of the 2017 Equifax data breach scandal where over 140 million American’s information was allegedly stolen by hackers.
And now you want to sell me, identity theft protection? Come on, man! Check out an article, for further details about how to remove public records from credit report files. Because getting slapped with these marks, is tantamount to setting off an atomic bomb on your credit score.
4 Steps To Dealing With Debt Collectors
If you’re currently receiving an endless flood of phone calls, or threatening letters from debt collectors. Or you’ve discovered a legitimate collection item on your credit reports, this is the four steps to dealing with debt collectors.
First, the most common concern for folks is if I pay off collections will it help my credit? As on 2018, no it won’t.
You see, just paying off collections and nothing more, will only result in a change in the status of this item on your credit reports. It’ll be changed to a paid collection.
This is still a negative item, that will hurt your credit score. According to Anthony Sprauve, a spokesman for FICO, collections on your credit reports can damage and drag your score down by as much as 100 points.
Please, don’t just stick your head in the sand with the false belief these guys will just disappear like a fart in the wind. In addition to these phone calls, letters, and the negative item on your credit reports.
They can also inflate your total balance with high-interest fees, and even collection fees. Moreover, if they’re unable to collect payment, they can turn around and sell your account to yet another debt collector.
Of course, this new debt collector will begin calling you, sending letters, and they’ll report even more negative information on your credit reports. Alternatively, they can sue you.
Yup, civil lawsuits are a very common tool debt collectors use. Their goal is to win a judgement against you, because then they’ve really got you by the short and curlies.
Judgments can result in wage garnishment, liens being placed against you and or your property, and even asset seizure. Check out your local legislation for full details, because every state has unique laws.
1. Request Debt Validation
Look, the Fair Debt Collection Practices Act (FDCPA) is federal legislation passed by Congress with the intention of regulating the debt collection industry. It says a lot, and it’s worth reviewing in detail at your convenience.
The biggest coup of the FDCPA is the right to have your debt validated. Essentially, when we request debt validation we’re saying to the debt collector, you first prove this is truly my debt, and then we may be able to discuss repayment.
It’s most effective to make this request in writing, and send it using certified mail, with return receipt requested. This way you’ll have evidence you made your request, and they received it.
You see, they’re required to respond by providing you with the paperwork, documents, and evidence that does, in fact, prove this is your debt. For instance, with a credit card collection they’d provide you with a copy of your initial credit card application.
If they fail to validate your debt, for any reason, then in accordance with the FDCPA you’re no longer legally responsible for payment. Further, they’re supposed to notify all three credit bureaus to have them get collections off credit report files, regarding this account.
2. How Old Is The Debt?
If your account is validated, our next step is to review this paperwork in detail. We’re looking for your last date of account activity.
You see, the statute of limitations is state law and this legislation says exactly how long you are legally responsible for repayment of a debt. This time-window does vary by state, so for full details check out your local legislation.
Generally, it’s about seven years from the first date of delinquency. Once this time-window runs out and expires, so does your legal obligation for repayment.
To clarify, you’re only legally responsible for payment for a specific number of years. Once the account, ages past these specific number of years, your legal obligation for payment is over. As in the debt is legally forgiven.
The statute of limitations applies to most types of consumer debt including medical collections, credit cards, charge off accounts, retail, telecommunications, utilities, and many more. The few exceptions are defaulted federal student loans, and federal income tax.
Beware. Yes, beware debt collectors, especially late-stage debt collectors are notorious for re-aging consumer accounts. This is often how and why bad credit can last for much longer than the maximum seven years. And this is frequently done illegally.
3. Negotiate a Settlement Agreement
Now, if your account is validated and within the legal time-window, our next step is to share how to pay collections and so it will improve your credit score. This requires us to negotiate a settlement agreement directly with the debt collector.
There’s two parts of your agreement, and it’s best to get this in writing. First, we need to negotiate to settle and pay off collections for just a fraction of the total balance.
Frequently, you’ll be able to negotiate to pay as little as 15% up to around 45% of the total balance. For instance, with a $500 debt, you may be able to settle for just 20% or $100.
But wait, before you make payment, we need to get this second part of our agreement in place. We need to get this debt collector to agree that in exchange for our payment, they’ll stop reporting our account information to all three credit bureaus.
Pay For Delete
You may have heard of using a pay for delete approach to dealing with debt collectors. If you’re unfamiliar this is where we first demand the debt collector delete the negative item from our credit reports, and then we’ll make payment.
This sounds wonderful and you’re more than welcome to try it. However, it’s never going to happen for so many reasons. Despite, seeing this hocus pocus all over the internet, it’s more likely we’ll see PETA opening a butcher shop.
Instead, they will even reluctantly in some cases, agree to stop reporting your account information to the credit bureaus in exchange for your payment. This is an agreement they will make, and it’s a much more effective, pragmatic, and useful approach.
4. How To Get Collections Removed From Credit Report
Our final step is sharing how to get collections removed from credit report files, because as we now know this is dragging our credit score down. To do this we’re going to use your consumer rights under the FCRA.
Yes, we’re going to dispute this collection item. Once the credit bureaus get our dispute and deem it valid and subsequently conduct their re-investigation.
They’re going to contact the debt collector and request they verify our collection account. As per our settlement agreement directly with the debt collector, they won’t verify our account when the credit bureaus investigate.
This is the second part of our settlement agreement. As a result, this is going to force the credit bureaus to remove collections from credit report, regarding this account.
Look, it’s not easy to remove bad credit, nor is it easy to deal with the credit bureaus or debt collectors. All these alphabet soup laws are passed to protect you, the consumer.
Yet, we still hear this blasphemous idea that it’s somehow illegal to remove so-called accurate bad credit before seven years. Who says if an item is accurate or not? You do, you’re the only one that knows. And the credit dispute process is the test of an item’s accuracy.
Remember, seven years is maximum amount of time a bad credit item can stay on your credit report. There is no minimum amount of time, any negative item must remain on your credit report. And if O.J. can get out of real prison early, you ought to be able to get out of bad credit prison early!
Keep in mind, your credit score is like your GPA in glory school days bygone. It doesn’t matter if you’re acing all your courses, if you’re failing The Art of Walking, because this negative mark is going to ruin your overall GPA.
This too is true of your credit score. And this is why it’s so powerful to clear credit report dings, blemishes, and remove any negative items. This is proven to be the most effective credit restoration strategy.
We encourage our members to consider professional, legal, and legitimate credit repair companies to help with this. Because the good news is, in 2016 alone, over 9 million negative items were removed from consumer’s credit reports.
One of the best credit repair firms is The Credit Pros. They’ve helped their client’s successfully remove collections, late payments, charge offs, judgements, liens, repossessions, foreclosures, even bankruptcy marks, and so many more negative credit report items.
Get a free credit consultation with a certified FICO professional by calling toll-free 1-877-418-7596. And for more tips, techniques, and strategies about how to get your credit score up with Dan Willis, sign up for our free newsletter and join our congregation.
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